Head of government: Prime Ministers Fatos Nano and, from October 2, Pandeli Majko

Albania in 1998 continued to suffer from its harsh political polarization. The opposition Democratic Party (PDS) of former president Sali Berisha ended a parliamentary boycott that it had started the previous year, demanding the resignation of the Socialist-dominated coalition government. Ignoring calls by the Organization for Security and Cooperation in Europe and the Council of Europe, the PDS declined to participate in the parliamentary commission that was working on a draft constitution. Following widespread allegations of government inefficiency and corruption in his administration, Socialist Prime Minister Fatos Nano reshuffled his Cabinet in mid-April, reducing the number of ministers. Local by-elections on June 21 and 28 confirmed continuing popular support for his coalition, which won in five municipalities and six smaller communities. The opposition won in two municipalities and three communities.

In late August police arrested former defense minister Safet Zhulali, former interior minister Halit Shamata, former chairman of state control Blerim Cela, and three other former officials of Berisha’s government on charges of crimes against humanity in conjunction with their alleged roles in the suppression of unrest in 1997. General Prosecutor Arben Rakipi charged the six with having ordered the use of chemical weapons, airplanes, and helicopters against civilians. Subsequently, Berisha called on his supporters to bring down the government "with all means," saying that the arrests were politically motivated. On September 14, after the killing of a Berisha aide, Berisha supporters seized government buildings in Tiranë. Government forces counterattacked and reoccupied the buildings, and on September 15 Berisha surrendered two tanks posted outside his headquarters after the government threatened to use force if his followers did not give up their weapons.

Intraparty squabbling led to Prime Minister Nano’s resignation on September 28, and he was replaced by 30-year-old Socialist Pandeli Majko a few days later. Pres. Rexhep Mejdani signed into law Albania’s first post-communist constitution on November 28.

More than 13,000 refugees fled into Albania after the eruption in February of civil war between the Serbian police and army and the ethnic Albanian separatist Kosovo Liberation Army (UCK) in the neighbouring province of Kosovo. The Albanian Foreign Ministry repeatedly charged Yugoslavia with border violations that included shelling and sniping and with conducting massacres of Kosovo’s civilian population. It also called for NATO military intervention to stop the fighting.